Search

Begin New Search Topic Finance Political Geography North America

51. Dossier 7: The Imperialism of Finance Capital and ‘Trade Wars’

Author:
Tricontinental: Institute for Social Research
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Tricontinental: Institute for Social Research
Abstract:
One cannot look at Trump and his policies in isolation from the crisis of ‘trade wars’. Trump promised to ‘make America great again’. He wants to resolve the crisis for America caused by neo-liberalism without violating its core characteristic, which is free global mobility of finance. At Tricontinental: Institute for Social Research, we have wondered about the essential nature of these ‘trade wars’ that have broken out between key allies. We turned to Prabhat Patnaik, Professor Emeritus at Jawaharlal Nehru University (JNU) in New Delhi (India), for assistance.
Topic:
Imperialism, Finance, Conflict, and Trade Wars
Political Geography:
North America and United States of America

52. Power and Crisis: Explaining Varieties of Commercial Banking Systems in Argentina, Brazil and Mexico

Author:
Sebastian Etchemendy and Puente Ignacio
Publication Date:
01-2017
Content Type:
Journal Article
Institution:
German Institute of Global and Area Studies
Abstract:
In the early 1980s Argentina, Brazil, and Mexico had commer- cial banking sectors that were dominated by local banks. The largest countries in Latin America were subjected to common international economic pressures during both the neoliberal 1980s and 1990s – includ- ing the expansion of capital markets in the periphery and integration into the regional trade agreements NAFTA and Mercosur – and the post- 1998 financial turmoil. By 2015, however, the three countries had con- solidated alternative commercial banking systems: domestic private group dominated (Brazil), mixed (i.e., ownership more evenly divided among public, private domestic, and foreign banks (Argentina), and foreign bank dominated (Mexico). The article traces these alternative outcomes to the power of prereform private financial groups, the viru- lence of “twin crises” in the transition from fixed to floating exchange rates, and the (contingent) role played by government ideology.
Topic:
Regional Cooperation, Finance, Trade, and Banking
Political Geography:
Brazil, Argentina, South America, Latin America, North America, and Mexico

53. Cannabis Social Responsibility: A Human Rights Based Approach to Marijuana

Author:
Joey White
Publication Date:
04-2017
Content Type:
Working Paper
Institution:
Center on Human Rights Education, University of Denver
Abstract:
ver the past 20 years, marijuana talk has been a hot subject for law makers in the United States with 21 states decriminalizing marijuana, 29 allowing medical marijuana, and 8 states having legalized the recreational use of cannabis products. Illinois may be next to join the ranks of recreational marijuana, as lawmakers have introduced a bill late last month proposing the legalization of recreational cannabis. Based on sales trends in Colorado, it is estimated that for Illinois, legal cannabis could generate between $350 million to $700 million per year in revenue.
Topic:
Human Rights, Finance, Drugs, and Marijuana
Political Geography:
United States and North America

54. US Pharma’s Financialized Business Model

Author:
William Lozonick, Matt Hopkins, Ken Jacobson, Mustafa Erdem Sakinç, and Öner Tulum
Publication Date:
07-2017
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Price gouging in the US pharmaceutical drug industry goes back more than three decades. In 1985 US Representative Henry Waxman, chair of the House Subcommittee on Health and the Environment, accused the pharmaceutical industry of “gouging the American public” with “outrageous” price increases, driven by “greed on a massive scale.” Even in the wake of the many Congressional inquiries that have taken place since the 1980s, including one inspired by the extortionate prices that Gilead Sciences has placed on its Hepatitis-C drugs Sovaldi since 2013 and Harvoni since 2014, the US government has not seen fit to regulate drug prices. UK Prescription Price Regulation Scheme data for 1996 through 2010 show that, while drug prices in other advanced nations were close to the UK’s regulated prices, those in the United States were between 74 percent and 181 percent higher. Médecins Sans Frontières (MSF) has produced abundant evidence that US drug prices are by far the highest in the world. The US pharmaceutical industry’s invariable response to demands for price regulation has been that it will kill innovation. US drug companies claim that they need higher prices than those that prevail elsewhere so that the extra profits can be used to augment R&D spending. The result, they contend, is more drug innovation that benefits the United States, and indeed the whole world. It is a compelling argument, until one looks at how major US pharmaceutical companies actually use the profits that high drug prices generate. In the name of “maximizing shareholder value” (MSV), pharmaceutical companies allocate the profits generated from high drug prices to massive repurchases, or buybacks, of their own corporate stock for the sole purpose of giving manipulative boosts to their stock prices. Incentivizing these buybacks is stock-based compensation that rewards senior executives for stock-price “performance.” Like no other sector, the pharmaceutical industry puts a spotlight on how the political economy of science is a matter of life and death. In this paper, we invoke “the theory of innovative enterprise” to explain how and why high drug prices restrict access to medicines and undermine medical innovation. An innovative enterprise seeks to develop a high-quality product that it can sell to the largest possible market at the most affordable price. In sharp contrast, the MSV-obsessed companies that dominate the US drug industry have become monopolies that restrict output and raise price. These companies need to be regulated.
Topic:
Finance, Business, Drugs, Innovation, Pharmaceuticals, and Stock Markets
Political Geography:
North America and United States of America

55. Ethics vs. Ethos in US and UK Megabanking

Author:
Edward J. Kane
Publication Date:
05-2017
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Company law in the US and UK fails to acknowledge that authorities’ propensity to rescue giant banks from the consequences of insolvency assigns taxpayers a coerced and badly structured equity stake in too-big-to-fail institutions. The entrenched managerial norm of maximizing stockholder value lends a misplaced legitimacy to efforts by TBTF managers to take on dangerous levels of tail risk because their bank’s deep downside is effectively eliminated by the prospect of unlimited taxpayer support. Conventional tools of prudential regulation constrain but do not de-legitimate this behavior. To accomplish that end, this paper calls for: (1) a formal recognition of the fiduciary duties that TBTF firms owe to taxpayers and (2) criminalizing aggressive pursuit of safety-net subsidies as “theft by safety net.”
Topic:
Finance, Ethics, Banks, Banking, and Ethos
Political Geography:
United Kingdom, Europe, North America, and United States of America

56. Explaining the Historic Rise in Financial Profits in the US Economy

Author:
Costas Lapavitsas and Ivan Mendieta-Muñoz
Publication Date:
10-2017
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
The ratio of financial to non-financial profits in the US economy has increased sharply since the 1970s, the period that is often called the financialisation of capitalism. By developing a two-sector theoretical model the ratio of financial to non-financial profits is shown to depend positively on the net interest margin and the non-interest income of banks, while it depends negatively on the general rate of profit, the non-interest expenses of banks, and the ratio of the capital stock to interest-earning assets. The model was estimated empirically for the post-war period and the results indicate that the ratio has varied mainly with respect to the net interest margin, although non-interest income has also played a significant role. The results confirm that in the course of financialisation the US financial sector has been able to extract rising profits through interest differentials and non-interest income, while the general rate of profit has remained broadly constant.
Topic:
Economics, Finance, Economic Growth, and Profit
Political Geography:
North America and United States of America

57. Predictive Macro-Impacts of PLS-Based Financial Conditions Indices: An Application to the USA

Author:
Duo Qin
Publication Date:
01-2016
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This investigation seeks to construct financial conditions indices (FCIs) by the partial least squares (PLS) method with the aims (i) that the FCIs should outperform interest rate, which is conventionally used in small VAR (Vector Auto-Regression) models to present the predictive macro-impacts of the financial markets, and (ii) that the FCIs are adequately invariant during regular updates to resemble non-model based aggregate indices. Both aims are shown to be attainable as long as the FCIs are tailor-made with carefully selected components and suitably targeted macro variables of forecasting interest. The positive outcome sheds light on why the widely used principal component analysis (PCA) approach is ill-suited to the tasks here whereas why the PLS route promises a fruitful way forward.
Topic:
Economics, Markets, Finance, and Macroeconomics
Political Geography:
North America and United States of America

58. Full Issue: Money & War

Author:
Sarah Detzner, James Copnall, Alex de Waal, Ian M. Ralby, Joshua Stanton, Ibrahim Warde, Leon Whyte, Richard Weitz, Jessica Knight, John H. Maurer, Alexander Tabarrok, Alex Nowrasteh, Tom Keatinge, Emily Knowles, Karolina MacLachlan, Andrew Lebovich, Caroline Troein, and Anne Moulakis
Publication Date:
01-2015
Content Type:
Journal Article
Journal:
Fletcher Security Review
Institution:
The Fletcher School, Tufts University
Abstract:
The Fletcher Security Review: Managed and edited by students at the Fletcher School of Law and Diplomacy, we build on the Fletcher School’s strong traditions of combining scholarship with practice, fostering close interdisciplinary collaboration, and acting as a vehicle for groundbreaking discussion of international security. We believe that by leveraging these strengths – seeking input from established and up-and-coming scholars, practitioners, and analysts from around the world on topics deserving of greater attention – we can promote genuinely unique ways of looking at the future of security. Each issue of the Review is centered around a broad theme – in this issue, we tackle “Money & War.” Money influences every aspect of warfare, conventional or unconventional. No nationstate military, insurgent group, terrorist network, trans-national criminal organization, or hybrid actor can be understood, or countered, without knowing where the money is coming from – as well as where, and how, it gets spent. Evolutions and revolutions in financial tools and practices quickly translate to transformations in military affairs, and some cases, vice versa.
Topic:
Security, Foreign Policy, Economics, Human Rights, Governance, Sanctions, Military Affairs, Finance, Islamic State, Navy, Arab Spring, Maritime, Conflict, Multilateralism, Islamism, Drugs, and Currency
Political Geography:
Afghanistan, Africa, China, Iran, Sudan, Darfur, Middle East, Asia, North Korea, Mali, Asia-Pacific, Sahel, United States of America, and North America

59. International Capital Flows and the Returns to Safe Assets in the United States, 2003-2007

Author:
Ben S. Bernanke, Carol C. Bertaut, Laurie Pounder DeMarco, and Steve Kamin
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
A broad array of domestic institutional factors--including problems with the originate-to-distribute model for mortgage loans, deteriorating lending standards, deficiencies in risk management, conflicting incentives for the GSEs, and shortcomings of supervision and regulation--were the primary sources of the U.S. housing boom and bust and the associated financial crisis. In addition, the extended rise in U.S. house prices was likely also supported by long-term interest rates (including mortgage rates) that were surprisingly low, given the level of short-term rates and other macro fundamentals--a development that Greenspan (2005) dubbed a "conundrum." The "global saving glut" (GSG) hypothesis (Bernanke, 2005 and 2007) argues that increased capital inflows to the United States from countries in which desired saving greatly exceeded desired investment--including Asian emerging markets and commodity exporters--were an important reason that U.S. longer-term interest rates during this period were lower than expected. This essay investigates further the effects of capital inflows to the United States on U.S. longer-term interest rates; however, we look beyond the overall size of the inflows emphasized by the GSG hypothesis to examine the implications for U.S. yields of the portfolio preferences of foreign creditors. We present evidence that, in the spirit of Caballero and Krishnamurthy (2009), foreign investors during this period tended to prefer U.S. assets perceived to be safe. In particular, foreign investors--especially the GSG countries--acquired a substantial share of the new issues of U.S. Treasuries, Agency debt, and Agency-sponsored mortgage-backed securities. The downward pressure on yields exerted by inflows from the GSG countries was reinforced by the portfolio preferences of other foreign investors. We focus particularly on the case of Europe: Although Europe did not run a large current account surplus as did the GSG countries, we show that it leveraged up its international balance sheet, issuing external liabilities to finance substantial purchases of apparently safe U.S. "private-label" mortgage-backed securities and other fixed-income products. The strong demand for apparently safe assets by both domestic and foreign investors not only served to reduce yields on these assets but also provided additional incentives for the U.S. financial services industry to develop structured investment products that "transformed" risky loans into highly-rated securities. Our findings do not challenge the view that domestic factors, including those listed above, were the primary sources of the housing boom and bust in the United States. However, examining how changes in the pattern of international capital flows affected yields on U.S. assets helps provide a deeper understanding of the origins and dynamics of the crisis.
Topic:
Finance, Capital Flows, Securities, and Capital
Political Geography:
North America and United States of America

60. U.S. International Equity Investment and Past Prospective Returns

Author:
Stephanie E. Curcuru, Charles Thomas, Francis E. Warnock, and Jon Wongswan
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Counter to extant stylized facts, using newly available data on country allocations in U.S. investors' foreign equity portfolios we find that (i) U.S. investors do not exhibit returns-chasing behavior, but, consistent with partial portfolio rebalancing, tend to sell past winners; and (ii) U.S. investors increase portfolio weights on a country's equity market just prior to its strong performance, behavior inconsistent with an informational disadvantage. Over the past two decades, U.S. investors' foreign equity portfolios outperformed a value-weighted foreign benchmark by 160 basis points per year.
Topic:
Economics, Finance, Investment, Stock Markets, and Equity
Political Geography:
North America and United States of America